I am currently an undergrad and I have a sell-side equity research interview coming up. I was gunning for Investment Banking, but a contact referred me to an ER position that has opened up at a decent MM. 1st round is in 2 days. Anyone got any good advice? I study finance/accounting so I was wondering what kind of technical questions should I be expecting? Current interview prep plan: 1) Read vault guide 2) Brush up on ratios/financial metrics 3) Pick a stock to pitch in the interview (ANY SUGGESTIONS?!?!!) 4) Quickly look over some of the past DCF models I’ve done 5) Won’t turn CNBC off 6) Prepare some after-interview questions 7) And, obviously get my “story” straight Should be a fun 2 days 
I’m a big fan of the top-down approach…for you to make an effective call, a lot of times the macro environment and the company’s sector will have much more of an impact on your call than the actual company itself. For example, lets for a moment pretend that GM is one of the most efficient and effectively managed companies out there, this still wouldn’t make them a good pick due to the current state of the economy and auto sector. As for picks, I a big commodity fan. When things eventually do turn around (and I have no idea when this will be) I exect this sector to outperform. If you need an individual pick, look for the top operators in the industry…
salvaNJ Wrote: ------------------------------------------------------- > I’m a big fan of the top-down approach… Eh…No. I don’t disagree that the top down approach is a good way to look at equities. If I was a PM that is exactly how I would approach things. But this is a sell-side ER interview. Sell-side analysts cover probably not more than 20-25 names tops, more probably 15. They are are supposed to be bottom-up experts and know companies inside and out. Taking a top-down approach doesn’t reach demonstrate that skill set.
I’d disagree with your disagreement - it just depends on if you are an industry specialist or a generalist Investors don’t worry about the color of the paint until they know whether its a beach house in california or a NYC penthouse. You can sell an ok business in a great industry and you can sell a great business in a shitty industry… just depends on how you package it to the right investor RAwannabeCFA Wrote: ------------------------------------------------------- > salvaNJ Wrote: > -------------------------------------------------- > ----- > > I’m a big fan of the top-down approach… > > Eh…No. I don’t disagree that the top down > approach is a good way to look at equities. If I > was a PM that is exactly how I would approach > things. But this is a sell-side ER interview. > Sell-side analysts cover probably not more than > 20-25 names tops, more probably 15. They are are > supposed to be bottom-up experts and know > companies inside and out. Taking a top-down > approach doesn’t reach demonstrate that skill set.
Look…I’m just gonna tell ya…If you go in talking about a top down approach for a sell-side RA position you probably aren’t goning to get the job. I’m not knocking top-down as an approach…in fact I favor it. I’m simply saying going into this type of interview you want to give the answer they want to hear which might not always be the right answer.
agree with RAwannabeCFA. Top Down is a great thing to lead with if the position is for an investment strategist, but for an ER Analyst if you have an idea of what sector it might be for focus on that. It might be better to be able to speak to many companies than pitch one at them…you like this cuz of that, you think this company has a good balance sheet, this company might trip a debt covenant, etc…
I listen to salesmen talk through our ideas with clients everyday… an investor does not want to drill down on specifics of the balance sheet before he has formed his view that the industry is in cyclical decline
I think the point here is that at an associate level, a company-level view is most important as you need to convey these micro-level fundamental on to the senior analyst…but when your but is on the line for making the buy/sell call at the senior analyst level, you must know what is going on around you.
Thanks everyone for the input. Im planning on pitching a stock that I’d be long on (TD Bank) and a stock that I’d be short on (still deciding, any suggestions). I believe the sector that the position is for is Industrials; which I know almost NOTHING about. Does anyone have a good Industrial stock I could talk about and the reasons that make it a good investment?
JasonU Wrote: ------------------------------------------------------- > I listen to salesmen talk through our ideas with > clients everyday… an investor does not want to > drill down on specifics of the balance sheet > before he has formed his view that the industry is > in cyclical decline The goal of sales people is to generate trades…They are responsible for knowing an entire coverage universe therefore they frequently pitch top down ideas and then when a client is interested in specifics they get them to talk to an analyst or an associate. An analyst who is looking to hire an associate probably wants to make sure his associate understands how to look at a company and understand what it does and what drives its top-line, bottom-line, and cash flow. Typically, buy-side guys already have their own macro view of things and call analysts to get a better understand of the indivdual company and industry. This is the reason why for a sell-side gig it is better to demonstrate an understanding of bottom-up skills…If you were interviewing for a Global Macro hedge fund then I would agree demonstrating a top down approach would be more useful.
In general, your strategy sounds good, but I would be wary of betting the farm on one or two stocks and I disagree that a top-down approach is wrong. If you get too focused on specific companies or if you focus on balance sheet issues or specific company stories, they might get the idea that you are too narrow in your approach. And I would definitely be prepared to answer how the current macro problems are affecting individual sectors and stocks. If you try to push the auto industry, for example, based on low valuations and multiples and brush over the fact that the sector is simply toxic for most investors right now, I think that would look pretty short-sighted. I had an interview for an ER analyst position this summer, which was successful. They gave me a sector and asked me to pitch a stock in that sector. I had spent my time preparing for companies in a different sector where the job was, so I was a little blown off course by that and it wasn’t my strongest moment in the interview. And there was plenty of discussion about the current economic environment. So that’s why I would avoid getting too focused on details. It is also important to remember that especially in these tough times, social aspects are going to be important because the bottom line is whether you bring in new business. It isn’t a bean counter position. A hefty part of the evaluation will be based on whether you can convince them that your client skills are solid.
I know very little about the company but from bottom up or top down I think you’d be making a mistake trying to pitch TD To be honest if you could peel back the layers and give a compelling argument to buy a bank stock in this tape you would not be interviewing. The stock has 4 complicated segments and the financial statements alone in its 40f are probably 150 pages. If it isn’t what the interviewer does he won’t want to hear it - and if it is what he does you’ll end up shooting yourself in the foot. and what I was saying from a macro side… canada just cut rates. Its major industries are all seeing declines. Mining is weak. Projects in the tar sands are probably halted. Manufacturing way down. Looks like they beat Q4 after numbers got cut 40%… what happens if it cuts that beautiful dividend?
I’m not knocking your pick - it’s just harder to value a financial company (ask Bill Miller) in any envirnment - especially this one.
The sector that I’ll be interviewing for is Industrials, but I know next to nothing about it. If you have any suggestions please do tell. I always assumed that the interviewer would like to see me use “good” judgement when pitching a stock, regardless of what it is, instead of pitching a stock they follow. Am I wrong? As for TD. I doubt I could value it, and I am sure that there are better picks out there but the reasons why I like it are as follows: -They have a great deposit base and are arguably the leading retail bank here in Canada. -Their Tier 1 Capital = good. -They are everything that the big US banks want to be, but aren’t. -Less competition in Canada, vs the States -TD is a bit more vigilant, take less risk (didn’t get as involved in subprime as other banks did, like BMO which is blowing up now) -Good dividend yield + future capital gain I think TD is a good place to hide until the market picks up again. The biggest reason, IMO, that their stock is being punished is the fact that they made a big acquisition in the US last year (Banknorth). But then again, I could be completely wrong.
Bump. Interview in a few hours. Any other suggestions?
I say relax and don’t forget to prepare well for the behavioral questions. Have a good idea of what’s going on in the market and on Wall Street right now. You are getting very caught up in knowing all the technicals and don’t seem to be focused enough on convincing the interviewer why you want the job and are a good fit for it. Just remember that the more detail you go into on the analytical side, the more likely it will be for the analyst to grill you on it…so say what you want to say, but remember that anything that comes out of your mouth should be defensible and you really ought to know it cold. Good luck buddy
Thanks a lot dude! I think I’m gonna just go over my story a few more times and just relax and wait for the phone call.
just be pleasant and know what you dont know
Yeah…seriously, if you come across as a pleasant guy, you’ll be fine. That’s the best you can do. Interviews are as much about the soft skills as they are the hard skills, because assuming you’re of above average intelligence and have a great work ethic, you can probably do the job. So many hiring decisions just come down to whether or not the person likes you, so just chill and you’ll be ok
Yeah - be yourself, be personable as numi said above.